Zenith Announces Second Quarter Results.Business Editors WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Aug. 6, 2002 Zenith zenith, in astronomy, the point in the sky directly overhead; more precisely, it is the point at which the celestial sphere is intersected by an upward extension of a plumb line from the observer's location. National Insurance Corp. (NYSE NYSE See: New York Stock Exchange :ZNT ZNT Zenith National Insurance Corp ZNT Zinc Transporter ZNT Zeitschrift für Neues Testament (German) ZNT Zentrum Neue Technologien (German) ZNT Journal Library for Natural Sciences and Technology ) reported operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. after tax of $6.5 million, or $0.34 per share, for the second quarter of 2002 compared to operating income after tax of $1.7 million, or $0.09 per share, for the second quarter of 2001. Operating income after tax for the six months ended June June: see month. 30, 2002 was $9.9 million, or $0.52 per share, compared to operating income after tax of $1.5 million, or $0.09 per share, for the six months ended June 30, 2001. Operating income in the six months ended June 30, 2001 includes catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses after tax of $1.0 million, or $0.06 per share. Net income for the second quarter of 2002 was $6.5 million, or $0.34 per share, compared to net income for the second quarter of 2001 of $2.9 million, or $0.16 per share. Net income for the six months ended June 30, 2002 was $9.3 million, or $0.49 per share, compared to net income for the six months ended June 30, 2001 of $2.8 million, or $0.16 per share. Gross workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. premiums written increased about 19% and 18% in the three and six months ended June 30, 2002, respectively, compared to the corresponding periods of 2001. In California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , gross workers' compensation premiums written increased about 27% both in the three and six months ended June 30, 2002 compared to the corresponding periods of 2001. The combined ratio for the property-casualty insurance operations was 103.1% for the six months ended June 30, 2002 compared to 109.8% for the six months ended June 30, 2001 and 118.9% for the year ended December December: see month. 31, 2001. The combined ratio for the Workers' Compensation operations for the six months ended June 30, 2002 was 105.2% compared to 112.5% for the six months ended June 30, 2001 and 114.0% for the year ended December 31, 2001. Book values per share at June 30, 2002 and December 31, 2001 were $16.59 and $16.31, respectively. Excluding the effect of unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. and losses on available-for-sale, fixed maturity investments, book values per share were $16.48 and $16.36 at June 30, 2002 and December 31, 2001, respectively. Commenting on the results, Stanley Stanley, town (1991 pop. 1,557), capital of the Falkland Islands, S Atlantic Ocean, on East Falkland island. It is the main port and trading center of the islands. The name is sometimes written as Port Stanley. R. Zax zax n. A tool similar to a hatchet, used for cutting and dressing roofing slates. [Variant of sax, from Middle English, knife, from Old English seax; see sek- , Chairman & President, said, "Improvement continues in our combined ratios, operating results and net income. Our California workers' compensation operations continue to grow faster and perform better than in the rest of the U.S. At June 30, 2002 our inforce workers' compensation premiums were $487 million. In July July: see month. , we grew our workers' compensation business by more in a single month than any other month in our history and added about $60 million of inforce premiums, mostly in California." The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. if accompanied ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed. Forward-looking statements include those related to the plans and objectives of management for future operations, future economic performance, or projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure, or other financial items. Statements containing words such as expect, anticipate, believe, or similar words that are used in this release or in other written or oral information conveyed by or on behalf of Zenith are intended to identify forward-looking statements. Zenith undertakes no obligation to update such forward-looking statements, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include but are not limited to the following: (1) heightened competition, particularly intense price competition; (2) adverse state and federal legislation and regulation; (3) changes in interest rates causing fluctuations of investment income and fair values of investments; (4) changes in the frequency and severity of claims and catastrophes; (5) adequacy of loss reserves; (6) changing environment for controlling medical, legal and rehabilitation rehabilitation: see physical therapy. costs, as well as fraud and abuse; (7) the terrorist attacks of September September: see month. 11, 2001, any future terrorist attacks and their aftermath AFTERMATH. A right to have the last crop of grass or pasturage. 1 Chit. Pr. 181. ; and (8) other risks detailed herein and from time to time in Zenith's other reports and filings with the Securities and Exchange Commission.
ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
(In thousands, except
per share)
TOTAL REVENUES $ 165,326 $ 154,548 $ 318,731 $ 289,813
SELECTED INCOME
(LOSS) DATA:
Net Investment
Income after Tax 8,543 8,502 16,982 17,330
Operating Income
after Tax (1) 6,517 1,688 9,855 1,499
Realized (Losses)
Gains on Investments
after Tax (2) (17) 1,212 (555) 1,301
Net Income 6,500 2,900 9,300 2,800
OPERATING INCOME
PER COMMON SHARE:
Basic $ 0.35 $ 0.10 $ 0.53 $ 0.09
Diluted 0.34 0.09 0.52 0.09
NET INCOME PER
COMMON SHARE:
Basic 0.35 0.17 0.50 0.16
Diluted 0.34 0.16 0.49 0.16
STOCKHOLDERS' EQUITY:
Stockholders' Equity $ 310,931 $ 309,225
Stockholders' Equity
per Share:
Including net
unrealized
appreciation
(depreciation) on
"Available-for-Sale"
fixed maturity
investments 16.59 17.67
Excluding net
unrealized
appreciation
(depreciation) on
"Available-for-Sale"
fixed maturity
investments 16.48 18.00
Number of
Common Shares:
Outstanding 18,747 17,500
Weighted Average
for the Period
- Basic 18,695 17,496 18,647 17,490
Weighted Average
for the Period
- Diluted 18,979 17,639 18,913 17,652
(1) Operating income excludes realized (losses) gains on investments
after tax.
(2) Net realized losses in the second quarter of 2002 are comprised of
realized gains from sales of investments offset by $4.3 million
before tax ($2.8 million after tax, or $0.15 per share) write down
of Zenith's investment in debt securities of WorldCom, Inc.
ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)
Six Months Ended June 30,
2002 2001
(In thousands)
REVENUES:
Premiums Earned $ 248,804 $ 220,398
Net Investment Income 25,470 26,245
Realized (Losses) Gains on Investments (1) (854) 2,002
Real Estate Sales 45,311 41,168
Total Revenues $ 318,731 $ 289,813
OPERATING INCOME:
Property-Casualty:
Underwriting Loss (2) $ (7,695) $ (21,502)
Net Investment Income 25,470 26,245
Property-Casualty Income 17,775 4,743
Interest Expense (3) (3,185) (3,685)
Parent Expenses (2,317) (1,742)
Income from Real Estate Operations 2,941 3,288
Income before Tax and
Realized (Losses) Gains 15,214 2,604
Income Tax Expense 5,359 1,105
Income after Tax and before
Realized (Losses) Gains 9,855 1,499
Realized (Losses) Gains on
Investments after Tax (1) (555) 1,301
NET INCOME $ 9,300 $ 2,800
(1) Net realized losses in the second quarter of 2002 are comprised of
realized gains from sales of investments offset by $4.3 million
before tax ($2.8 million after tax, or $0.15 per share) write down
of Zenith's investment in debt securities of WorldCom, Inc.
(2) 2001 includes catastrophe losses of $1.5 million ($1.0 million
after tax, or $0.06 per share).
(3) The outstanding balance of Zenith's 9% Senior Notes was repaid May
1, 2002.
ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)
(In thousands) Six Months Ended June 30,
2002 2001
PROPERTY-CASUALTY
UNDERWRITING:
Gross Premiums Written:
Workers' Compensation:
California $ 136,586 48.3% $ 107,534 44.2%
Outside California 118,835 42.0% 109,513 45.1%
Total Workers'
Compensation 255,421 90.3% 217,047 89.3%
Reinsurance 27,289 9.7% 26,049 10.7%
282,710 100.0% 243,096 100.0%
Net Premiums Written:
Workers' Compensation:
California 124,117 48.0% 104,508 44.2%
Outside California 107,503 41.5% 106,455 45.0%
Total Workers'
Compensation (1) 231,620 89.5% 210,963 89.2%
Reinsurance 27,169 10.5% 25,555 10.8%
258,789 100.0% 236,518 100.0%
Net Premiums Earned:
Workers' Compensation:
California 117,501 47.2% 97,226 44.1%
Outside California 106,909 43.0% 100,274 45.5%
Total Workers'
Compensation (1) 224,410 90.2% 197,500 89.6%
Reinsurance 24,394 9.8% 22,898 10.4%
248,804 100.0% 220,398 100.0%
Underwriting (Loss)
Income before Tax/
Combined Ratio
Workers' Compensation (11,646) 105.2% (24,731) 112.5%
Reinsurance (2) 3,951 83.8% 3,229 85.9%
(7,695) 103.1% (21,502) 109.8%
COMBINED LOSS AND
EXPENSE RATIOS:
Workers' Compensation:
Losses and Loss
Adjustment Expenses 75.0% 80.9%
Underwriting Expenses 30.2% 31.6%
Combined Ratio 105.2% 112.5%
Reinsurance (2):
Loss and Loss
Adjustment Expenses 63.4% 68.6%
Underwriting Expenses 20.4% 17.3%
Combined Ratio 83.8% 85.9%
Total (2):
Loss and Loss
Adjustment Expenses 73.8% 79.6%
Underwriting Expenses 29.3% 30.2%
Combined Ratio 103.1% 109.8%
(1) Premiums in 2002 are net of $14.7 million of ceded premiums
written and $10.0 million ceded premiums earned in connection with
a 10% ceded quota share reinsurance agreement effective January 1,
2002 for policies effective on or after January 1, 2002.
(2) 2001 includes catastrophe losses of $1.5 million before tax.
ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)
Three Months Ended June 30,
2002 2001
(In thousands)
REVENUES:
Premiums Earned $ 127,530 $ 115,760
Net Investment Income 12,808 12,865
Realized (Losses) Gains on Investments (1) (26) 1,865
Real Estate Sales 25,014 24,058
Total Revenues $ 165,326 $ 154,548
OPERATING INCOME:
Property-Casualty:
Underwriting Loss $ (2,263) $ (9,690)
Net Investment Income 12,808 12,865
Property-Casualty Income 10,545 3,175
Interest Expense (2) (1,086) (1,882)
Parent Expenses (1,065) (746)
Income from Real Estate Operations 1,574 2,176
Income before Tax and Realized (Losses) Gains 9,968 2,723
Income Tax Expense 3,451 1,035
Income after Tax and before
Realized (Losses) Gains 6,517 1,688
Realized (Losses) Gains on
Investments after Tax (1) (17) 1,212
NET INCOME $ 6,500 $ 2,900
(1) Net realized losses in the second quarter of 2002 are comprised of
realized gains from sales of investments offset by $4.3 million
before tax ($2.8 million after tax, or $0.15 per share) write down
of Zenith's investment in debt securities of WorldCom, Inc.
(2) The outstanding balance of Zenith's 9% Senior Notes was repaid May
1, 2002.
ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)
(In thousands) Three Months Ended June 30,
2002 2001
PROPERTY-CASUALTY
UNDERWRITING:
Gross Premiums Written:
Workers' Compensation:
California $ 74,408 51.5% $ 58,739 47.4%
Outside California 60,490 41.9% 54,530 44.1%
Total Workers'
Compensation 134,898 93.4% 113,269 91.5%
Reinsurance 9,588 6.6% 10,510 8.5%
144,486 100.0% 123,779 100.0%
Net Premiums Written:
Workers' Compensation:
California 66,900 51.1% 57,119 47.4%
Outside California 54,457 41.6% 52,944 43.9%
Total Workers'
Compensation (1) 121,357 92.7% 110,063 91.3%
Reinsurance 9,537 7.3% 10,469 8.7%
130,894 100.0% 120,532 100.0%
Net Premiums Earned:
Workers' Compensation:
California 61,839 48.5% 52,000 44.9%
Outside California 55,273 43.3% 52,881 45.7%
Total Workers'
Compensation (1) 117,112 91.8% 104,881 90.6%
Reinsurance 10,418 8.2% 10,879 9.4%
127,530 100.0% 115,760 100.0%
Underwriting (Loss)
Income before Tax/
Combined Ratio
Workers' Compensation (4,312) 103.7% (12,147) 111.6%
Reinsurance 2,049 80.3% 2,457 77.4%
(2,263) 101.8% (9,690) 108.4%
COMBINED LOSS AND
EXPENSE RATIOS:
Workers' Compensation:
Losses and Loss
Adjustment Expenses 74.8% 80.0%
Underwriting Expenses 28.9% 31.6%
Combined Ratio 103.7% 111.6%
Reinsurance:
Loss and Loss
Adjustment Expenses 54.7% 59.1%
Underwriting Expenses 25.6% 18.3%
Combined Ratio 80.3% 77.4%
Total:
Loss and Loss
Adjustment Expenses 73.2% 78.1%
Underwriting Expenses 28.6% 30.3%
Combined Ratio 101.8% 108.4%
(1) Premiums in 2002 are net of $8.9 million of ceded premiums written
and $6.5 million ceded premiums earned in connection with a 10%
ceded quota share reinsurance agreement effective January 1, 2002
for policies effective on or after January 1, 2002.
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